Manley: Neighbors will survive disagreement

Canadians are wondering if relationships with the United States have been damaged by the government's decision to wait out the war in Iraq.

Not so, said Deputy Prime Minister John Manley, who assured a meeting of British Columbia Liberals that Canada's decision hasn't hurt relations.

The decision not to support the U.S.-led invasion wasn't reached easily, as Canada fully supports the disarmament of Saddam Hussein, Manley said.

Canada, however, looks to international bodies such as the United Nations to take the lead role, he said, adding: "Our neighbors understand that."

Manley stopped short of criticizing the United States for attacking Iraq but said: "If we are prepared to relinquish our sovereignty, then we may as well get all the advantages of it and sign on as the 51st state."

Meanwhile, Alberta Premier Ralph Klein is praising President Bush for his "leadership in the war on terrorism and tyranny."

"As Americans put their lives on the line to preserve freedom and security, we feel that friendship more strongly than ever," Klein wrote in a letter to Paul Cellucci, the U.S. ambassador to Canada.

He accused Prime Minister Jean Chretien of leaving Canada's friends in the lurch by refusing to commit troops.

Ontario Premier Ernie Eves also opposes Chretien's action, while Manitoba Premier Gary Doer and Quebec Premier Bernard Landry have praised the decision to stay out of the conflict without U.N. support.

-- Citing the war in Iraq, Air Canada said it will cut 3,600 jobs and make service cutbacks to reduce costs in a tough travel market. This would trim the workforce to 35,000 at Canada's largest airline.

The company also wants $650-million in labor cost concessions from unions.

Facts and figures

Canada's inflation rate rose to 4.6 percent in February from 4.5 percent because of rising gasoline and energy prices. Analysts say this will lead to higher interest rates.

The Bank of Canada key interest rate remains at 3 percent while the prime lending rate is 4.75 percent. Canada's dollar is lower at 66.89 U.S. cents while a U.S. dollar returns $1.4949 Canadian, before bank exchange fees.

The Toronto Stock Exchange index rose to 6,523 points Friday while the Canadian Venture Exchange was lower at 1,052 points.